Green bonds are a key tool for governments to raise capital to implement infrastructure plans in line with national climate targets, as governments move to achieve their Nationally Determined Contribution (NDC) targets, as set in the Paris Agreement and the international Sustainable Development Goals (SDGs). A sovereign green bond can provide a strong signal of the country’s commitment to a low-carbon economy, help bring down the cost of capital for green projects by attracting new investors, and mobilise private capital towards sustainable development.
Key highlights of the briefing include:
The process of issuing a sovereign green bond is similar to that of issuing a standard green bond. However, there are some additional steps to consider, given the more complex organisational nature of governments, the type of expenditures they can entail and their debt’s benchmark role in domestic capital markets. The Briefing Paper outlines the seven basic steps (mentioned below) and provides detailed examples of how countries have done this so far.
1. Engage governmental stakeholders2. Establish a green bond framework3. Identify eligible green budget items4. Arrange independent review5. Issue the green bond6. Monitor and report7. Repeat